Craig Thomas was part of the team that successfully represented Sibanye Stillwater and its subsidiary, DRDGold in a contested merger proceeding before the Competition Tribunal
Sibanye, represented by a team of counsel which included Craig Thomas, opposed the proposed sale of Sasol’s sodium cyanide business to Draslovka. Sibanye obtained leave to intervene in the merger reconsideration proceedings instituted by Sasol and Draslovka.
The merger involved the sale of Sasol Sasol’s sodium cyanide business to a Czech Republic-based producer of sodium cyanide, Draslovka.
Sodium cyanide, a chemical compound commonly used in the extraction of precious metals like gold and silver, is an important input for the gold mining firms operating in South Africa. Sasol has a monopoly position in the production of liquid cyanide in South Africa and the gold mining sector is dependent on Sasol for the supply of liquid cyanide.
The Competition Commission prohibited the merger in November 2021 on grounds that, among others, it would likely result in a substantial prevention or lessening of competition due to post-merger price increases which would be detrimental to customers i.e. gold mining firms. The Commission also found that the proposed merger would have a substantial negative effect on the public interest given its effects on the South African gold mining sector.
The merger parties thereafter filed an application for consideration to the Competition Tribunal based on several grounds, including that the Commission had not considered the significant efficiencies and public interest benefits arising as a result of the proposed transaction.
During the Tribunal hearing, the Commission and Sibanye presented factual and economic evidence that suggested Draslovka might impose import parity prices for locally produced liquid sodium cyanide post-merger. As a result, South African gold mining firms would be price-takers from Draslovka, with no practical alternatives. The resultant price increase would significantly impact the profitability and long-term viability of gold mining firms. Moreover, the cost of sodium cyanide would affect the lifespan of some gold mining operations, leading to reduced gold production, employment, and foreign exchange earnings. This would have a notable negative economic and public interest impact.
Following a hearing in the Tribunal and comprehensive submissions, the Tribunal delivered its ruling, finally prohibiting the proposed merger.
